PayPal has announced that it is making changes to their legal agreements with certain customers in the US and Canada.
Some of these policy updates mean that customers will be charged higher rates when converting currency. This in turn means they will lose more money while dealing with international payments.
We’re going to take a look at the changes PayPal are making that will have an impact on the accounts of customers in the US and Canada.
US
The following amendments are being made to PayPal’s Account User Agreement and the PayPal Cash/PayPal Cash Plus Terms & Conditions in the US:
- The currency conversion spread is changing to 3.75% for transactions that involve a PayPal currency conversion when you pay for goods or services or send money.
- PayPal are changing the currency conversion spread to 3.0% for all other transactions involving a PayPal currency conversion.
The following are the amendments that will be made to PayPal Website Payments Pro and Virtual Terminal Agreement:
- The PayPal currency conversion spread is changing to 3.0% for all transactions involving a PayPal currency conversion.
- Paypal are providing the terms and conditions for our Account Updater functionality. When made available, Account Updater will allow merchants to update their U.S. customers’ eligible card data stored with PayPal to enable the seamless processing of recurring billing, recurring payments, and/or other eligible transactions.
Per PayPal’s website, all of these changes will come into effect on September 3, 2019.
Canada
These are the amendments being made in Canada to the PayPal Account User Agreement:
- The company will provide at least 90 days’ notice to Business Account holders of the introduction of a new fee or an increase of an existing fee related to credit or debit card transactions which apply to them.
- For transactions that involve a PayPal currency conversion when you pay for goods or services or send money, the currency conversion fee will be a minimum of 3.5% for Canadian or US dollars, and will be a minimum of 4% for all other currencies. This change will become effective on September 9, 2019.
- The currency conversion fee will be a minimum of 3% for all other transactions involving a currency conversion. This change will also become effective on September 9, 2019.
The following are the amendments being made to the PayPal Website Payments Pro and Virtual Terminal Agreement:
- The company is providing the terms and conditions for our Account Updater functionality, which allows merchants to update their Canadian customers’ eligible card data stored with PayPal to enable the seamless processing of recurring and other transactions.
- PayPal are clarifying that they will provide at least 90 days’ notice to Merchants of the introduction of a new fee or an increase of an existing fee related to credit or debit card transactions which apply to them.
- The PayPal currency conversion fee will become 3% for all transactions involving a PayPal currency conversion. This change will become effective on September 9, 2019.
What Does this Mean for You?
If you’re billing customers in different currencies, you will be paying a high price for currency conversion. You’ll also be dealing with uncertainty regarding the real exchange rate at the time of the transaction.
As an illustration, if your customer pays outside of banking hours in North America, you are likely to get an adverse exchange rate when its morning banking hours in Europe – and the banks in US/Canada are not yet open. On top of that, you would incur the 3-4% currency conversion charges levied by PayPal. Since you have no control over the timing of the transaction on PayPal, you have no choice in this regard when accepting an online payment.
The currency conversion charge applied by PayPal obviously goes out of your profits or forces you to mark up your pricing to that extent. For many businesses, a 4% extra markup is not an option as it makes them uncompetitive. More so when you are expecting larger payments, the total cost adds up to prohibitive costs. Imagine paying $400 when receiving a payment of $10,000. Not much better than the high costs at the bank, is it?
Is There a Cheaper Way to Make International Payments?
Typically, using a money service business (MSB) is cheaper than using a bank. Banks charge high fees on wire transfers, and often offer unfair exchange rates to maximise their profit on your transaction.
However, as we can see above, some MSBs and providers like PayPal can also charge rather high fees when converting currencies. This is where REMITR can help save you big time on international payments.
With REMITR, you get access to the best live FX rates, 24/7. This means you never lose large chunks of money when making payments. You can also forget about crazy high bank wire transfer fees. Using our platform means you pay just $5 per transfer – no matter how much you send!
When it comes to receiving payments – from anywhere in the world – theres’ no better way than using REMITR Collect.
Once you register for REMITR Collect, you will receive a free REMITR Global Account. Receiving payments into this Global Account is completely free! The REMITR Global Account allows you to collect payments in either Euro or US Dollar. You can then withdraw them in CAD to your local bank account.
You do not have to worry about selling your USD/EUR to get CAD, as REMITR always converts to CAD at the most optimal Foreign Exchange rates!
If you’re in need of a payment method you can really trust, get in touch with REMITR today.
